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3 Ways to Protect Yourself Financially During the COVID-19 Crisis

By Dave Kovaleski - Mar 21, 2020 at 11:30AM

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What to do if you can't pay your bills.

The COVID-19 pandemic has affected the world economy in unprecedented ways. Never before in most of our lifetimes has the nation been through a period where people have been asked to stay home, work remotely if possible, or not work.

The social distancing measures being taken are grounded in science, as the goal is to "flatten the curve" in an effort to slow the spread of the virus. Ultimately, it will help save lives and reduce the health effects of the pandemic, which is the primary goal right now.

But it's obviously had huge effects on people's finances, particularly those who work in retail, entertainment, restaurants, hospitality, travel, and education, to name a few of the hardest-hit areas. This is not to mention the devastating effect the pandemic has had on the markets, draining people's 401(k)s and investments. The markets will come back, as they have through other crises and recessions, but many are feeling the financial effects right now.

Here are some tips from the Consumer Financial Protection Bureau (CFPB) on how you can guard against the financial effects of the COVID-19 pandemic.

Protect yourself if you can't pay your bills

If you are out of work, have reduced hours, or have experienced a loss of income in any way, it can be difficult to pay bills and meet financial obligations. The CFPB recommends reaching out to your lenders and loan servicers to let them know your situation. They will likely be able to work with you on a new payment schedule, waive fees, provide extensions, or find other solutions to provide relief.

Be prepared to answer questions on how much you can pay and when you'd like to restart regular payments, among others. If you have student loans, check if you qualify for a delayed, reduced, or alternative payment program.

A hand blocking a virus with a note that says Novel Coronavirus: Protect Yourself.

Image source: Getty Images.

The U.S. Department of Housing and Urban Development (HUD) also has professionals available to provide advice for little or no cost on your options and working with mortgage lenders and servicers. You can also seek out HUD-approved housing counselors or credit counselors to assist with credit card-related issues.

The alternative of not reaching out and missing a payment, or being late, can have long-term effects on your credit. "The CFPB and other financial regulators have encouraged financial institutions to work with their customers to meet their community needs," CFPB officials said.

Protect yourself if you lose your job

In addition, many companies have been forced to close temporarily, while others may permanently shut down. If you lose your job, and your income, contact your state unemployment office to apply for unemployment benefits or explore their various resources. Last week, the Labor Department reported 281,000 unemployment claims -- up 70,000 from the previous week. The 281,000 claims is the most in a week since Sept. 2, 2017.

Seniors may also qualify for government benefits. Visit the National Council on Aging's web site, which has links to state or local assistance.

Protect yourself from scammers

Scammers have been out in full force trying to trick people out of their money in various ways related to COVID-19. One popular scam, reported by police departments across the country, involves people calling, claiming to be from the CDC, asking people to make a reservation to be vaccinated with a credit card and social security number. Another scam is similar, with callers asking for your information for a coronavirus test. According to reports, over one million coronavirus-related robocalls have been placed.

There are also fraudsters who will send texts or emails asking you to click a link for information on the virus. But the link spreads malware to your phone or device. There are others asking for donations or selling products the scammers claim cure the virus.

In times of social isolation, where people are home-bound, it may be tempting to engage, but the CFPB warns against it. "Be cautious of emails, texts, or social media posts that may be selling fake products or information about emerging coronavirus cases," a CFPB official stated.

The Federal Trade Commission and the Food and Drug Administration have already issued warning letters to seven sellers of products that claim to treat or prevent the coronavirus.

The FTC cautions Americans not to click on links from sources they don't know, and to trash emails claiming to be from the Centers for Disease Control and Prevention (CDC). They won't send out emails. If you want the most up-to-date information, visit the Centers for Disease Control and Prevention (CDC) and the World Health Organization (WHO) web sites. 

Also, ignore any offers for vaccinations, as they are not yet available, and fully research any requests for donations. Never give money on the spot. Do your homework on the organization first and then proceed accordingly.

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